Using supplier credits from debit note with cash payments

I don’t add to inventory using a Purchase Invoice. I order from the supplier’s website and pay with PayPal, a Cash Account. After doing an Import Bank Statement, that transaction appears as a Spend Money Payment in which the supplier shows as the Payee.

After using a supplier credit on a subsequent purchase, I noticed that the Payment transaction in Manager doesn’t show the Debit Note balance under Assets - only Accounts Receivable. However, I have found a way to use up the Debit Note amount so the transaction in Manager reflects my invoice.

On a subsequent purchase, I add a line to the Payment transaction, select Accounts Payable, the supplier’s name and enter my supplier credit as a negative amount. That amount will offset the Debit Note amount. I’m open to suggestions if there’s a better way to do this.

Your post is very confusing. First, what do you mean by “Debit Note balance?” I assume you are referring to Supplier credits, which is the account–in older versions of Manager–that a debit note would show up in. A recent software version update eliminated the separate Supplier credits account. Now, credits from a supplier simply reduce the Accounts payable balance for that supplier. Accounts receivable is not involved at all.

This is not necessary. Any amount owed to you by a supplier will be automatically applied to the next invoice.

What you are doing is burying errors in the Accounts payable account.

So…update your software. Then go back and get rid of all those negative supplier credit entries. They are distorting your bookkeeping.

I am using the latest version and the original post caught my eye because I was in a similar situation. For clarity, perhaps I should have said Debit Note “total” vs. “balance” for clarity. But as I mentioned before, I don’t use invoices – my purchase transactions are recorded in a Cash Account since they all come in from bank statement imports. Each entry has the same format as if I had manually clicked “Spend Money”.

As an example: On 3 separate occasions, I returned inventory items back to my supplier. On each occasion, they issued me a credit and I then created a Debit Note in Manager for that amount, which also correctly reduced my inventory. Let’s say the total balance of the 3 Debit Notes (or Supplier Credits) for that vendor was $300.

Subsequent to that, I made a large, $1000 purchase from that supplier which was recorded in Manager as a Spend Money (or Payment) transaction in my PayPal cash account. The $300 credit was used in this purchase, so I added a line to the Payment transaction, selected Accounts Payable, entered the supplier’s name and a negative $300. The $300 Debit Note total for that supplier went to zero and the transaction correctly showed that I only had to pay $700 to PayPal.

This was the only way I could figure out how to record and use credits, since Supplier Credits are gone and I don’t use purchase invoices. Now I’m not married to this method – it’s just a way that seemed to work.

Now I understand what you did. You are using things in a way not intended, but as nearly as I can tell, it works.

Purchase invoices, debit notes, sales invoices, and credit notes are all supposed to be linked to suppliers and customers. When you entered your debit notes, they went to the the supplier’s subaccount in Accounts payable. The problem is that Payments are not linked to suppliers or customers. While you enter a payee or payer name, those don’t link to defined suppliers and customers. So available credits are not picked up automatically.

When you force things by allocating to Accounts payable and the supplier and enter the negative number, you seem to magically come out all right. What I’m not sure of is how this might ripple through the rest of the program, possibly into other accounts, possibly to reports. I just don’t know.

The design of the program assumes that if you are buying and/or selling on credit terms, you will use invoices. And a debit note is an aspect of buying on credit. So I think you’ve found a hole that possibly works for you. I don’t know of another way except for invoices.

If I were you, I would build a test company and try a few transaction, looking at the Summary at every step to see all the ramifications. And then look at various reports. See if you can find any flaws before you go too far down this road.